South Africa steps up power cuts after fault at new mega plant

JOHANNESBURG (Reuters) - South Africa’s state utility Eskom stepped up power cuts on Thursday after a breakdown at its mammoth Kusile power plant project exacerbated a shortfall of generating capacity, reminding investors of the risks to economic growth.

The logo of state power utility Eskom is seen outside Cape Town's Koeberg nuclear power plant in this picture taken March 20, 2016. REUTERS/Mike Hutchings

Eskom supplies more than 90 percent of the power in Africa’s most industrialised economy but has suffered repeated faults at its coal-fired power station fleet and is choking under a 420 billion rand ($29 billion) debt mountain.

Its problems are a major challenge for President Cyril Ramaphosa as they threaten to stymie efforts to haul the economy out of a protracted slump before a national election in May.

Kusile and sister project Medupi will be two of the largest coal-fired power stations in the world when complete, but they are years behind schedule and tens of billions of rands over budget. The few units at Kusile and Medupi which are online perform unreliably.

“The first unit in commercial operation at Kusile tripped this morning, sending the system into deficit,” Andrew Etzinger, Eskom’s acting head of generation, told Reuters.

“Insufficient maintenance in recent years means many other coal stations are also experiencing failures,” he added.

Eskom said it would cut 2,000 megawatts (MW) on a rotational basis countrywide from 1300 GMT, likely until 2100 GMT, a month after implementing some of the worst power cuts in several years. It had earlier said it would cut 1,000 MW.

Etzinger said around 12,000 MW of Eskom’s roughly 45,000 MW capacity was offline because of unplanned outages and that diesel supplies were also under pressure. Eskom burns diesel when it is unable to generate sufficient power from its fleet of mainly coal-fired plants.

The latest power cuts were announced as data showed that South Africa’s key mining and manufacturing sectors remained weak, driving the rand 0.5 percent lower against the U.S. dollar.

Ramaphosa’s government has promised to inject 23 billion rand ($1.6 billion) a year over the next three years to shore up Eskom’s balance sheet, although there are signs that more money could be needed.

On Thursday, the cabinet said it was concerned about the performance of Medupi and Kusile and that a team of experts appointed to assess Eskom’s technical challenges should produce a preliminary report within a month.

South Africa’s economy started the year on a weak footing, even before February’s power cuts, data showed on Thursday. Analysts say power problems are a major factor contributing to weak business confidence.